The former Rangers manager Graeme Souness fears the club will cease to exist in their current form as they prepare to pay the price for "chasing the dream".

Souness told TalkSport: "I think they will go into administration and reappear as Rangers 2012 or something, sadly. It is just a tragedy that has happened to them.

"I think they will come out of it. I think there will be an addition to the name, Rangers 'whatever'. They will come out without their debt and start again."

Souness was at the forefront of Rangers' big-spending revolution, signing Terry Butcher and Chris Woods after becoming the club's manager in 1986. He then worked closely with the former owner Sir David Murray after the latter's takeover in 1988, before leaving for Liverpool in 1991.

The big spending continued under Walter Smith and Dick Advocaat, forcing Murray to underwrite a £57m share issue in 2004. But it was the use of employee benefit trusts from 2001 which looks likely to trigger the club's descent into administration.

Souness added: "Without pointing the fingers at anyone in particular, people have to hold their hands up and say they got their sums wrong in a very large way. They are not alone. I think it could easily happen to clubs in the Premiership who don't have an individual benefactor, who don't have someone who is stinking rich who can fund it going forward and take loss after loss.

"I just think it is a case of chasing the dream, trying to give the supporters what they want and it has all come home to roost, unfortunately."